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Alan Mutter started it. He said the newspapers "Original Sin" was not charging for online content from the beginning.

He was wrong, of course — many newspapers tried and failed at paid content online in the early days, and even the ones who stuck with it never generated enough revenue to make up for their declines in advertising revenue.

But Mutter’s "Original Sin" meme started a trend toward "Original Sin" guess work about just where and when newspapers went wrong with their online strategies.

Steve Buttry hits on one possible answer with his "Original Sin" post. His answer: The bundling of online ads with print ads. Bundling devalued online ads and taught advertisers online could be viewed as an add-on, just something extra.

There’s merit to the assertion, but it misses why newspapers bundled ads in the first place.

Simply put, they couldn’t sell online advertising in the early days.

In most cases, publishers relied on their existing print sales staffs.

That seemed logical, I suppose, but in an era when selling print advertising was more like order taking and less like selling, why would a fat-and-happy print sales rep go out and actually SELL a low-margin online banner? That was too much like work.

Steve makes the point that bundling taught advertisers to see online as nothing but an add-on, but the flip side is that back in the day, local advertisers barely even knew online existed, let alone how it might benefit their businesses.

Publishers who needed to justify the salaries of their online staffs needed to ensure online operations contributed to the bottom line. The only way to do that was through bundling.

And bundling was easy. Advertisers who might not get online, at least understood that online audiences were growing agreed it made sense to put their ads online with an established local brand at a low cost. Advertisers simply didn’t object to bundled pricing.

Besides bundling, publishers also tried hiring online-only sales reps. The problem, however, is they were rarely really online-only. They weren’t allowed to sell against the print reps, and had to consult with print reps on mutual clients, were encouraged to go out with print reps on "four-legged calls" and easily fell into thinking the only clients worth calling on where the ones already buying newspaper advertising.

Throughout the history of newspapers online, there has simply been a lot of thinking that there isn’t much different between the Web and print.

It’s understandable. The Web, especially in the early days, is a text-dominated medium. The natural response is to think editors could simply move print stories into pixels and be done with it. From the very beginning we called this "shovelware" and "the daily dump," but the practice has persisted.

If publishers thought the Web was no different for content, how could they possibly be expected to see online sales were different, too?

And this leads to my theory of the "Original Sin."

The Original Sin was? Failure to create separate business units for online.

And I’ll plead guilty to a share of this sin.

As director of new media in Ventura and VP of interactive in Bakersfield, I certainly had some grasp that online wasn’t print. I did push such innovations (at least for the time) as comments on stories, video, web-first publishing, locally focused home pages, user profiles/social networking. But looking back, I see now that I still had a lot of newspaper-think in my outlook.

In both Ventura and Bakersfield, I saw it as my job to figure out how to make enough money online to pay for the newsrooms as constructed at the time.

That seemed impossible without being tethered to the mother ship, mooching of established customers and existing sales, and hoping some day, some how, we could convert that bundled revenue into pure online revenue.

It wasn’t until late 2007 that a switch tripped in my head and I realized I needed to flip the expense/revenue picture upside down. Instead of thinking about how to generate more cash, I needed to figure out how to create a news operation that could exist profitably based on a reasonable expectation for local online revenue.

In a market where the newspaper newsroom might cost $10 million, I knew how to make $1 million online, or even $2 million, but I didn’t know — and still don’t — how to make $10 million.

So if I can make a million online, why do I need operate a $10 million newsroom, especially given the greater efficiencies of online publishing?

It was that realization that lead to planning The Batavian (not that The Batavian will ever make anything close to $1 million, just illustrating with round numbers).

Here’s what a separate online business unit would look like:

Minimally staffed on both the sales and content side.

Both staffs would operate in a building far away from the newspaper office.

No newspaper content would feed the web site, and the online staff wouldn’t consult or work with the newspaper staff on stories. There would be a total wall of separation.

There would also be a total wall of separation between sales staffs.

The separate business unit would be competitive with the newspaper, not complimentary.

It’s a little surprising to me that after all my study of Clayton Christensen and other thinkers on disruptive innovation that I didn’t see more clearly sooner the imperative of a separate operation, but it is what we should have been doing.

The thing about this approach is that by starting small, starting with the lowest cost possible, in the disruptive innovation model, you have your best chance to grow a $10,000 business into a $10 million business. In a disruptive world — which online is by its very nature — if you start out with a $10 million expectation you’re only going to end up making the kind of mistakes that eventually lead to failure. By starting smaller, you can adjust more quickly to a turbulent environment.

So, if the "Original Sin" had’n’t been committed, if newspapers had created more totally separate business units, would newspapers be "saved" today?

I don’t know.

The strategy could have hastened their demise, but I think you can also make the case that by letting newspapers be newspapers, and keeping online far away, you would have had fewer readers dropping subscriptions in favor of free online content. Maybe. Maybe the online competitor would have been seen by readers as just another media outlet, not a replacement for the newspaper.

It might not have saved newspapers, but it would have been the right thing to do, because it would have led to greater innovation. It also would have helped publishers retain a foothold in communities they served should the newspaper ever fail.

And it may not be too late for this approach, but newspapers are pretty hemmed in now with their existing newspaper.com operations — making too much money to put at risk, but not enough to make a difference in the current model.

The sad things is, though, there are probably a lot of journalist who might find the whole memo radical and scary. And maybe that’s the only reason the Abrams memo is important at all — not that it’s new, but that Abrams has a loud enough voice to be heard over the complaints of change resisters in newsrooms across the land.

A common complaint in the journalism world is that newspapers aren’t innovative enough. The complaint usually goes something like, “Why didn’t a newspaper invent Google or Yahoo! or MySpace?” And then there is some finger pointing at executives for not funding R&D or being bold enough in their visions.

This “why didn’t we come up with the big idea” is one of the myths of innovation.

The problem with innovation in incumbent industries isn’t the lack of big ideas. It’s the failure to see the importance of little ideas, because they don’t point the way to immediate profits commensurate with current company values.

All innovation starts with taking a look at what tools and materials are available now and how they can be used differently. It involves finding a job to done and figuring out how to modify what’s already on the table. Or it involves, “oh, I can use that thing differently and I bet this will help other people, too.”

That was true of the light bulb, the telegraph and YouTube.

Innovation is small. It only looks big in hindsight.

Google began with a small, simple idea — what if we ordered our search results based on how many sites link to a particular URL (not even an original idea, since the notion of authority ranking pre-dates the web). Simple idea. Big results.

Any person working in any department of a newspaper can be an innovator. The trick is to look at what you do every day, what you touch every day, and ask, “are there other uses for this?”

For example: Find a rubber band and ask yourself, “what could I do with this to derive as much value as possible?”

Long, thoughtful, thought-provoking piece from Zac Echola. It’s a must read for any journalist with any doubt that the game has changed radically and forever. This isn’t a “transition period” for newspapers. It’s a whole new game.

See, I’m kind of tired of people talking about how newspapers are going through a “transition.” As in, “we just need to get through this transition.”

Transitions have beginnings, middles and ends. Transitions eventually stop and you get a chance to take a breath and say, “cool, we survived.”

This is no transition, because the changing will never stop. This is no transition because this is a radically different world from the one of mass-produced packages dumped on people’s door steps. The fact that there is still news on paper may be a mere echo of history.

It’s hard to believe news on paper will ever die. It’s also hard to believe news on paper will survive.

We just don’t know, but even if print survives, it will only survive because people in our news organizations become adapt at adjusting to constant change.

The print business, if it survives, will never stop feeling the increased pressure of competition, changing lifestyles and evolving audience expectations.

Print revenue is not likely to ever grow again. Digital revenue, at least, has no known ceiling.

If we expect print to survive, then we need to keep those products going while adjusting to change. But we also need to make digital a higher priority, because that’s the once chance we have to grow revenue and save, if not create, jobs.
Part of that adjustment is recognizing that digital media is fundamentally and radically different from packaged goods media. It calls for a different kind of journalism, and a different mindset from journalists.

Here’s the hard part: For as long as it survives, your print product is largely fine. It could maybe use a nip and tuck, but the people who continue to get the print product like what you do and don’t want you to change.

Online, that’s a whole different story. You’ve got to be different, and radically so. You need to write differently, file your copy at different times, make sure to provide appropriate links, include some video or extra photos, make a map or two, respond to reader comments (correcting, amplifying or scolding), participate in blogs related to your coverage area, and you simply must be smarter and better informed about what you cover if you want to retain the respect of your readers.

The hard part is, you must do all this and keep your more traditional print product going in an era of diminishing resources.

I don’t have an easy answer, except “just do it.” It’s really up to each individual to figure out how to reconfigure his or her job to meet the demands of both the print and the online audience. The responsibility for change doesn’t rest solely in the publisher’s office. It’s also the responsibility of every reporter, editor and clerk.

I think it can be done. I see people doing it everyday. My concern is not enough journalists are even trying.

The main point is — stop calling it a transition. If there was a transition, the inflection point passed four or five years ago. We can’t keep calling it a transition hoping someday soon all this turbulance will end. It won’t. The fundamentals of the media business are altered radically and forever.

The other day, Nick Sergeant was messing around with Yahoo! Pipes. He discovered that by ingesting content from one of our newspaper sites, and comparing those stories to the content in a specific story, he could automatically create related links to other stories on that site.

We immediately launched this on a bevy of sites, because it was so quick and easy, but then found that not all of the links were showing up as quite as related as we wanted.

With a few more tweaks to help narrow the range of possible matches, as well as adding the ability for editors to manually add a related link, we’ve now got something that works pretty darn good.

We have additional enhancements planned to improve the content matching, but we’ve got a good start.

Note: There are vendors who provide this service for thousands of dollars. Thanks for one smart developer playing around with the latest, cool open-network tools, GateHouse Media can now make it available on our sites for free.

Another cool tool Nick found is Wufoo. Wufoo is an easy-to-use form builder.

As any developer knows, building forms sucks. It’s a lot of repetitive work that would be better assigned to a robot. Wufoo takes all the heavy lifting out of form building. It’s a tool so easy to use, according to Nick, there is no reason any reporter or editor in any newsroom couldn’t use it to add some interactivity to a story or story package (assuming the CMS makes it possible). Nick writes about Wufoo here.

I’ve written quite a bit recently about the need to reinvent journalism. Not everybody believes its necessary. I still say, we should listen to our readers more and less to other journalists and our sources.

Two thirds of Americans – 67% – believe traditional journalism is out of touch with what Americans want from their news, a new We Media/Zogby Interactive poll shows.

The survey also found that while most Americans (70%) think journalism is important to the quality of life in their communities, two thirds (64%) are dissatisfied with the quality of journalism in their communities.

The Zogby survey also said newspaper readership (by that, I think they mean the print edition) is down significantly. While there may be some truth in that, it’s important to remember the poll is skewed because it was strictly an online survey. That doesn’t change, of coure, that a large percentage of Americans are dissatisfied with the way journalists today practice journalism.

In light of my previous post on innovation, it’s fair to ask, why didn’t a newspaper company come up with this idea.

It’s a simple idea — take the example of an existing product (in this case, Google News), and imagine a new use for the same concept using available tools and build a product that is just good enough to launch.

So nobody is confused: I’m not saying this is the kind of idea that should necessarily come out of a newsroom (again, in light of some comments on the previous post), but that if newspaper executives freed up their programming talent to work on innovative ideas, then maybe they would come up with sites like these. The talent and staff is out there, and some of newspaper programmers are doing innovative work. But there’s an aspect to this NewsClipper idea that is, “duh!”

The good news is, NewsClipper isn’t fully developed. It’s only scraping a few top news sites. It’s a nice proof of concept, but it needs work. It needs more content. It needs more meta data. It needs a better UI. And it’s going to run afoul of major media legal teams because it strips ads from the content.

A product that can get to market first that over comes those limitations could stand a chance at success. Building it won’t be easy, but NewsClipper provides an example of where and how to start.

It’s tempting to get focused on a solution that you think will help your online efforts (let’s give everyone a video camera! Let’s give everyone a blog!), when experience says that real innovation is built over time.

He thinks professional media organizations have fewer challenges because they have dedicated web staffs.

I’m not 100 percent sure about that. Online staff members are really busy keeping up with the job responsibilities associated with the same old same old. Put the stories online. Organize the stories online. Put in a picture if you have time. These backbreaking duties significantly decrease the time available for stacking the building blocks of innovation.

There are some false assumption going on, IMHO, in both Bryan’s and Angela’s posts.

Innovation can come from any where. You don’t need dedicated staff driving innovation. Creative people are innovators. It doesn’t matter what their job descriptions are. It’s a cop out to say, “I don’t have time to be an innovator.”

The important thing for a manager to do is to recognize this and give creative staff members room to roam — don’t just turn down every idea they present, or deny them the tools to try new things. The creative ones, the ambitious ones, will naturally come up with new and interesting ideas.

That’s why making blogs and video-capable cameras available to every staff member — and I mean every staff member, not just newsroom or online personnel, but advertising, production and circulation, too — is a good idea. You never know what wide distribution of these easy, inexpensive tools might yield.

Furthermore, its important separate innovation from incrementally following the leader. The web staff making incremental changes to a CMS is not innovation, as Angela seems to suggest. We all know what a modern CMS should do, what tools it should have — the fact that many newspaper lack these tools is more a matter of regret than R&D.

If you really want to be an innovator, it’s important to understand what innovation is.

Primarily, it’s standing on the shoulders of those who went before you. It’s a matter of looking at what tools and technologies already exist and figuring out how they can be used differently, remixed and recombined, to solve the unmet needs of your target consumers.

I like to find (a) simple solutions (b) to overlooked problems (c) that actually need to be solved, and (d) deliver them as informally as possible, (e) starting with a very crude version 1, then (f) iterating rapidly.

This pretty much defines using available technologies, finding unmet needs, getting them out the door quickly in a “good enough” fashion, and then incrementally improving the product or service as customer demand or opportunity dictates.

In other words, it fits in very well with The Innovator’s Solution, a book every journalist with an inkling of interest in innovation or “saving the industry” should read.

Remember back in the 1990s when Microsoft seemed unbeatable? That was a time when worries about anti-trust violations began to surface and most pundits figured Apple Computer would soon be out of business. Windows ruled the world.

Remember circa 2001 when just about every newspaper company in the world was trying to figure out how to turn its web site into a portal? The goal was to be the one web site anybody ever really needed. We talked about being sticky and keeping people on our site as long as possible. Where did the idea, and the buzzword, come from? We all wanted to be the local Yahoo!

This week, Microsoft, battered by declining market share and slowing profit growth decided that its best bet to survive was to buy Yahoo! — but not the Yahoo! of 2001, which was worth an estimated $90 billion back then, but a Yahoo! whose fortunes have sunk so deeply, its market cap was about a quarter that price (Microsoft is offering a 62 percent premium on Friday’s share price).

In a little more than a single decade, what happened to these two once seemingly invulnerable companies?

Change happened. Markets shifted. New competitors arose. New ways of doing business and making money were invented.

The names and business models of the competitors doesn’t really matter, because competitive turbulence is inevitable for any business.

Except, of course, newspapers.

No, wait. Newspapers are in trouble now, too.

Twelve years ago, who could blame a newspaper publisher for looking back on nearly 300 years of newspaper industry dominance in the media and think, “we will live forever.”

When you haven’t seen any real change in your lifetime, or whatever change came along (radio and TV, say), made only a marginal difference (“hey, we’re still running at 35 percent profit margins!), why worry?

We now realize, of course, that the same laws of business that change markets and make ensured survival impossible, can kill newspapers, too.

It’s a good book to cause a little further reflection on what business survival means.

I’ve known a few business leaders in the industry who have sworn by Good to Great or In Search of Excellence or other business books that promise some step-by-step formula for success.

The Halo Effect, by Phil Rosenzweig, makes a great case that following the management principles in those books is really like chasing unicorns.

For example, the research in Good to Great is faulty and incomplete. Jim Collins and his team failed to account for, among other things, the Halo Effect, which is what you get when you measure performance by post hoc evaluations. Because the performance was good, than the management must have been good, and if the management was good, then the leader must have been good, and if the leader was good, then he created a good work culture, etc. Those attributes add up to a cascade of halos.

Collins also failed to look for companies that did all the things his “good to great” companies did but still failed.

In other words, the book lacked scientific rigor.

The fact of the matter is, the real research, the boring research (not the good story weaved by Collins) is that all of the management rules in the world, if well implemented, can at best only achieve a 10 percent improvement in performance (or so cites Rosenzweig). At best.

And none of that matters if market forces change and the company does nothing to respond. That’s when sticking to what you know best becomes a liability rather than a good business practice.

What’s more important than “having the right people on the bus” and “level five leadership”? How about strategy and understanding competitive advantage, not to mention simply getting the job done once you know what to do?

Of course, When your business is essentially a monopoly, as newspapers were for many, many decades, who needs to worry about strategy?

The problem: You never really know if a strategy is going to work. If you know a business plan will work, it isn’t really strategy. Then, it’s merely tactics. Strategy is about taking risk and trying the untried.

We all know how willing newspapers have been to try new things.

That habit is changing, but there is still a big tendency among some industry managers to buy into the “Good to Great” hedgehog theory (which Rosenzeig notes Collins got completely wrong both in mythology and application).

Newspapers can’t simply just “stick to the core business,” as a Collins-like hedgehog would do. Newspaper managers must be more fox like — more nimble, more willing to seek and seize opportunities.

Which, I suppose, raises the question of whether we have the right people on the bus?

Probably at some companies and not at others.

It’s a hopeful sign that many managers have been willing to explore, if not embrace, the API NewspaperNext initiative, which at least attempts to get newspaper executives to dive deep into strategic thinking.

My question is: Are newsrooms willing to learn the lessons of business history and allow the news/journalism industry to evolve. Or will they insist that nothing at all needs changed. That seems to have been Jim O’Shea’s answer, and the journalism world applauded his “principled stand.”

I’m not sure, however, that taking a stand constitutes a well conceived business strategy.

“Not since the merger of the Union and Tribune over 15 years ago have we faced such wrenching changes,” he (CEO Gene Bell) wrote. “At the same time, never in our history have we faced revenue losses as dramatic as those of the last 12 months.”

Observation: The U-T offered free classifieds and that did not stem the tide of revenue loses.

I’m not trying to draw a direct connection, just saying … it didn’t help.

The only time I’ve ever heard of an MSM newspaper offering free classifieds and using it to win market share was in Arkansas when Walter Hussman took the Democrat from second-tier player into only game in town.

There might be a very scary lesson about the inability of a market leader’s inability to use disruptive strategy to beat other disruptive players.

What worked for Hussman to beat a bigger paper, may not work for a market leader like the leading metro in town to beat Craigslist and other free-classified sites.

If that’s true, then sustaining innovations (which most newspapers have been pursuing in the recruitment ad space for a decade) may be the only way to go.

In a piece about data portability, John Battelle shifts into a discussion about the difference between a business that competes on price vs. a business that competes on service. He says:

An example. My local market charges far more for a good bottle of wine than many shops that are nearby. But there’s a wine guy who works at that market who knows wine cold, and who I trust. Also, the market is close to my home, and I have a personal relationship with the fellow (OK, here’s the reference to the book I’m working on – I have a “conversation” going with this merchant). Those factors, combined with a certain ambiance at the store that I really like, all lead to one result: I buy my wine at the more expensive store. Why? Because the store competes on more than price.

Ironically, I just found a booze store near my house that not only has great prices, but also great service — an owner who knows his booze (not just wine) cold. But that’s beside the point.

The newspaper industry is awash in talk about disruption and innovation. I do it, too. It’s important. We’ve had API do NewspaperNext. But there’s more to saving this industry than coming up with new ideas. I want to know when API is going to do NewspaperBetter.

All of the evidence suggest that ever since the Woodstein era began, readership and circulation have been in decline. Now, there are lots of reasons for that (subject of a future post), but there’s also little doubt that there is something about American newspaper journalism since the 1970s that is turning people off.

We’re not even winning the content battle on the web, so it isn’t just about delivery, convenience or changing lifestyles. It’s also about something that we’re doing or not doing.

Through all of the debates we’ve had about video, there is a “quality crowd” that seems to think the only thing I care about is slapping up a bunch of crappy videos just to make video.

That totally misses the point.

The point is about reinventing newspaper journalism, and I believe video is going to be a big part of newspaper journalism from here on out, and reinvention is all about doing it better.

The quality crowd doesn’t seem to understand, or doesn’t seem to care, that quality isn’t about the camera you carry, the software you use or how much time you spend in an editing bay (if you’re using an editing bay, by the way, you’re in overkill mode). Quality is about the skill, knowledge, experience, understanding, talent and intuition that helps you get bits of interesting stuff — the stuff people really care about, want to read about, or want to see and hear.

Getting good at any creative endeavor is hard work. It takes time. I don’t care how smart you are, it takes time. Getting good isn’t about equipment. It’s about heart and soul.

So the best thing to do to get good is to do it. Get started. Explore and discover and feel free to fail. You must make yourself create things and not be afraid of some of the crap you will create along the way.

That’s also what my posts encouraging journalists to dive deep into the online social life and conversation are all about.

To be a great modern journalist, you MUST be a wired journalist. You must GET online. That doesn’t mean you just know how to do a Google search, read a few blogs and send a few e-mails. It means you get the culture, the attitudes and the expectations of the online crowd.

Until you do it, you’ll never understand that there is a difference. That’s why I don’t take very seriously the critics who say this call to action is a lot of bunk. They haven’t done it. They don’t know what they’re talking about, or what we’re talking about.

During one of the football games I watched last week, the announcer referred to an interview he did that week with a first-year NFL coach. When asked what was different about the NFL than he expected, the coach said that what he expected to find in the NFL was a group of professional football players, and he was shocked to find just how few professionals there were in the league. Very few players in the NFL, he said, are professionals. They don’t go about their jobs and their routines the way a professional would.

I submit that if you’re a professional journalist, you’ve already done most of what I put in my suggested MBO plan. And if you don’t think you need to do those things, than I question whether you’re really a professional.

It is time for newspaper journalists to set up and start creating the competitive advantage that will help us win. Current newspaper journalism is pretty much a commodity. When what you produce becomes a commodity, you can no longer win on price (and some journalists think we should be charging a fee for what people are already telling us doesn’t much interest them). You can only win on a competitive advantage. For journalists that should be doing a better job of story selection, presentation and interaction with the people in their communities.

If you don’t believe me, go read Mindy McAdams. She’s got it exactly right. I wish I had written that post. It could be the primer for an API NewspaperBetter project.

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About

Howard Owens is a digital media pioneer. He started publishing local news online in 1995 when very few local news outlets had web sites. The header image on the site depicts the film camera he used early in his career and the press pass from his year on the staff of the Carlsbad Journal. For more on Howard's professional background, read his LinkedIn profile
HowardOwens.com is the personal web site of Howard Owens and covers his range of interests -- political localism and libertarianism, music and personal interests, as well as his professional interests.
Howard is currently publisher of The Batavian and lives in Batavia, N.Y., with his wife Billie, five cats and Rottweiler "Pachuco."